Most people have a general idea of how much they feel comfortable spending.  It’s equally important to know how much your lender calculates you can afford.  With assistance provided by your REALTOR®, you’ll be able to better prepare the many details required during the financing application process.

  • Evaluate your financial situation as the lenders do.  Typically, your total monthly housing costs of mortgage principal and interest payments, property taxes and hazard insurance (PITI) should not exceed 28 percent of your gross monthly income.  Or, housing costs plus any outstanding monthly long-term debt should not exceed 36 percent of gross monthly income.
  • Determine how much your financial institution is willing to lend you.  Our chart below can help you get a good idea of the capital you’ll have to work with, but you should call on your Agent for help during the pre-qualification process.
  • Know how much you can afford in monthly payments.  Lenders factor in sales price and down payment, but place more importance on how much you can handle monthly.
  • Become a pre-approved buyer.  Pre-approval gives you more buying strength since the lender makes a credit decision and pre-approves you for a certain mortgage amount.  You’ll know what price range your lender will approve — and you’ll be in a position to make an offer as soon as you find the right home.

Mortgage Chart – Your guide to affordability

Your mortgage power may surprise you.  This chart shows how much house you can afford at any given interest rate.  To use it, simply find the monthly payment you can afford and read across to the nearest current interest rate.  The point where the two intersect shows you how much mortgage that monthly payment will buy.

It is important that you obtain a mortgage pre-approval.  This is an essential time-saver when you come upon the house you want to buy.  Mortgage pre-approval is like securing a loan before you find a house, and it’s a real peace of mind to know exactly what you can afford.

Payments below are based on a 30-year amortization and include principal and interest only. Ask your REALTOR® what to add for taxes and insurance.

 

Monthly Payment 4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 7.00% 7.50% 8.00% 8.50% 9.00%
$300 62,837 59,208 55,885 52,836 50,036 47,463 45,092 42,905 40,885 39,016 37,285
$400 83,783 78,944 74,513 70,449 66,717 63,284 60,123 57,207 54,513 52,021 49,713
$500 104,729 98,680 93,141 88,061 83,396 79,105 75,154 71,509 68,142 65,027 62,141
$600 125,675 118,416 111,769 105,673 100,075 94,926 90,185 85,811 81,770 78,032 74,569
$700 146,621 138,152 130,398 123,285 116,754 110,748 105,215 100,112 95,398 91,038 86,997
$800 167,567 157,887 149,026 140,897 133,433 126,569 120,246 114,414 109,027 104,043 99,425
$900 188,513 177,623 167,654 158,509 150,113 142,390 135,277 128,716 122,655 117,048 111,854
$1,000 209,459 197,359 186,282 176,121 166,791 158,211 150,308 143,018 136,283 130,054 124,282
$1,100 230,405 217,095 204,910 193,734 183,471 174,032 165,338 157,319 149,912 143,059 136,710
$1,200 251,351 236,831 223,539 211,346 200,150 189,853 180,369 171,621 163,540 156,064 149,138
$1,300 272,297 256,567 242,167 228,958 216,829 205,674 195,400 185,923 177,169 169,070 161,566
$1,400 293,243 276,303 260,795 246,570 233,508 221,495 210,431 200,225 190,797 182,075 173,995
$1,500 314,189 296,039 279,423 264,182 250,188 237,316 225,461 214,526 204,425 195,080 186,423
$1,600 335,135 315,775 298,051 281,794 266,867 253,137 240,492 228,828 218,054 208,086 198,851

 

Depending upon your situation, there may be other Financing Options available.  You should rely on the expertise of your REALTOR® and Loan Officer during the critical final stages of the home buying process. He or she can answer questions, serve as your representative, and attend to the important details that affect your purchase.

 

Contact Infinity Realty Guam today for the real estate company that will provide quality service you deserve.  (Click here).

DISCLAIMER: This information is provided for general awareness only and is not intended for the purpose of providing legal, accounting, tax advice or consulting of any kind.  Please consult with a professional in their respective expertise for complete details.